The 1930’s: Between the Wars      Great Depression originated here with the stock market crash on October 24, 1929 (Black Thursday Or Tuesday Or Monday.) Severe drought in 1930 caused further economic damage to the agricultural industry Central banking gave loans they shouldn’t have, people panicked and withdrew savings, banks closed Devaluation of the American Dollar led to the end of the Gold Standard, changing to a fiat currency (money that exists because an authority or custom declares it to be money) Unemployment rate reached 25% If paid in full within 12 months.* ON ALL MAJOR APPLIANCE, FLOORING, OUTDOOR POWER EQUIPMENT AND GRILL PURCHASES of $299 or more made on your Lowe’s® Consumer Credit Card *Lowe's® Consumer Credit Card: Applies to single-receipt, in-store Major Appliances, Flooring, Outdoor Power Equipment and Grill purchases of $299 or more (and any other items purchased on the same sales receipt) made March through March 19, 2008 on a Lowe's Consumer Credit Card account No monthly payments will be required and no finance charges will be assessed on this promotional purchase if you pay the following in full within 12 months: (1) the promotional purchase amount, and (2) any related optional credit insurance/debt cancellation charges If you not, finance charges will be assessed on the promotional purchase amount from the date of purchase and monthly payments will be required Standard account terms apply to non-promotional purchases APR is 21.99% Minimum finance charge is $1.00 Offer must be requested at time of purchase Offer is subject to credit approval *Lowe's® Consumer Credit Card: …No monthly payments will be required and no finance charges will be assessed on this promotional purchase if you pay the following in full within 12 months: (1) the promotional purchase amount, and (2) any related optional credit insurance/debt cancellation charges If you not, finance charges will be assessed on the promotional purchase amount from the date of purchase and monthly payments will be required Standard account terms apply to non-promotional purchases APR is 21.99% Minimum finance charge is $1.00 Offer must be requested at time of purchase Offer is subject to credit approval New Goods for Sale · In the 1920’s, people began to purchase items they couldn’t afford through the use of installment buying, or buying on credit · Installment buying increased the demand for goods, while consumer debt increased Advertising · In the 1920’s business used advertising to convince consumers that they would be happier if they bought their product How does the stock market work? You buy 100 shares of stock of x $5.00 per share How much money have you invested? $500.00 Scenario #1 stock increases to $20 per share How much are your 100 shares of stock now worth? 100 shares of stock x $20.00 per share $2,000.00 How much profit have you made? $2,000.00 stock value - $500.00 initial investment $1,500.00 net profit How does the stock market work? You buy 100 shares of stock of x $5.00 per share How much money have you invested? $500.00 Scenario #2 stock decreases to $1 per share How much are your 100 shares of stock now worth? 100 shares of stock x $1 per share $100.00 How much money have you lost? $100.00 stock value - $500.00 initial investment $400.00 net loss Stocks Surge · Millions of Americans invested in the bull market, becoming rich as stock prices rose Buying Stocks on Margin: Scenario A No problemo! It was a pleasure doing business with you! investor stock broker Buying Stocks on Margin: Scenario A Now let’s figure out how much money I made! $2,000 net worth - $900 owed $1,100 profit - $100 initial investment $1,000 net profit investor Buying Stocks on Margin: Scenario B Six months later, Ford stock decreases to $1 per share My 100 shares are now worth 100 shares x $1 per share $100 investor stock broker Buying Stocks on Margin: Scenario A Too bad, hotshot! You still owe me $900! investor stock broker Buying Stocks on Margin: Scenario A But I’m broke! What am I going to do! investor stock broker Buying Stocks on Margin: Scenario A I don’t care what you as long as you pay me back! investor stock broker · Some people began to buy stocks on margin, which is similar to installment buying * Unquestioned faith in the bull market helped lead to the Great Depression!      International trade plunged 2/3 Cities dependent on industry were hit hard Crop prices dropped 60% Most countries underwent government run relief reforms Most countries moved politically to the right or left in search of a better structure (FDR, Hitler, Stalin, etc.)       Economic decline had been coming for awhile, but the NYSE crash was the final catalyst as many wealthy Europeans had invested in it Credit structure collapsed in 1931, withdrawing loans from U.S., further damaging them Several countries turned to leaders that promised better times and a change, even if their ideas were radical Suffered low wages, unemployment, growing dependence on military production (Germany) Forced colonies to buy only European products ½ German population lived in poverty        Depended on rubber and tin trade with the West (automobile industry) Companies in Asia had much less profit because of lack of sales Japan lost money on silk production as synthetic fabrics were invented Japanese exports dropped 50% Bad harvests and unemployment India created import duties and stayed level Results: suspicion of West increased, Japan tried to seek more Asian markets       Had a strong economic tie to the U.S According to a League of Nations report at the time, Chile, Peru, and Bolivia were the hardest hit countries in the world Fascist governments rose in popularity as a result, particularly in Brazil Industrialization began finally in Brazil only Many colonial areas depended on the sale of their agricultural exports to afford industrial imports, but couldn’t any longer Results: greater state planning in economy, new political ideas imitating dictatorships in Europe  The Depression directly contradicted the attitude of the 1900s that prosperity was forward moving progress (CCOT)  It challenged the idea that democracies could control their countries and always be successful  Interrupted industrialization, except…    The Soviet Union was busy industrializing, collectivizing, communizing… Genocide under Stalin “cleansed” the lazy, the unwilling, the doubtful, and those related to them Also Southern Africa prospered as gold became more important (before dropping the gold standard) Increase in unemployment Loans to Europe end Industry Shrinks (esp Germany) Profits for industry fall Tariffs to protect industry People have less to spend International trade collapses   Countries were unable to pay war debts, sending each other into further decline Increased mistrust between US, Britain, France, decreased cooperation